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Viceroy

Martin Armstrong

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http://armstrongeconomics.com/archives/30480

The Coming Crash of All Crashes – but in Debt

money-stock-1980-2011.png?resize=584%2C3

Why are governments rushing to eliminate cash? During previous recoveries following the recessionary declines from the peaks in the Economic Confidence Model, the central banks were able to build up their credibility and ammunition so to speak by raising interest rates during the recovery. This time, ever since we began moving toward Transactional Banking with the repeal of Glass Steagall in 1999, banks have looked at profits rather than their role within the economic landscape. They shifted to structuring products and no longer was there any relationship with the client. This reduced capital formation for it has been followed by rising unemployment among the youth and/or their inability to find jobs within their fields of study. The VELOCITY of money peaked with our ECM 1998.55 turning point from which we warned of the pending crash in Russia.

https://research.stlouisfed.org/fred2/series/M2V/

The full chart is worth a look, it's never been lower.

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His 78 year Real Estate Business cycle shows 2015 as the last top out and then decline for 18 years til 2033. Means houses won't necessarily be a good store of value or investement.

His graph was first produced in 1979 - all seems to have panned out as he predicted when you compare it to HPC's chart.

Note this cycle is relevant only to the countries based in the West, as the East is on a different part of the cycle wave.

image.jpg

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post-8743-0-76945000-1431920427_thumb.jpg

post-8743-0-32885700-1431920444_thumb.jpg

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The significance of the all-time low in the velocity chart is that supply is simultaneously at an all-time high. Money supply times money velocity (if calculated correspondingly) equals GDP. So, if economic activity in terms of the amount of trade stayed relatively stable, a reversion of the velocity to the mean (or beyond) will bring a price explosion a.k.a. (hyper-)inflation.

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Interesting that the velocity had been increasing for years (since 1987) leading upto the 1997 general election and then peaked that year. NuLabour still won - massively (179 majority).

It was declining but still near the peak leading upto the 2001 general election. NuLabour incumbent won (167 majority).

It was in general decline but had been increasing for about 2 years leading upto the 2005 general election. NuLabour incumbent still won (66 majority).

It was still in general decline but had been increasing for less than a year leading upto the 2010 general election. NuLabour lost (Coalition 78 majority).

It's continued its steep decline ever since and not even a short blip upwards leading upto the 2015 general election. Conservative won (12 majority).

(majorities according to wikipedia)

Edited by billybong

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+1

Does he explain why he got 1998 wrong?

No - looks like a tiny plateau for that period.

http://armstrongeconomics.com/archives/27642

GFC2 when it comes is exponentially bigger than GFC1, and with all downturns house prices fall. People need to sell assets to raise cash, mortgages are harder to come by.

The coming sovereign debt bust combined with global banking failures means capital from around the world will seek tangible assets to store wealth in - including real estate. So what does this mean? Does real estate tank first, but then rise in certain attractive areas to soak up all the capital? Bankrupt Governments will surely tax anything that doesn't move, so real estate over the coming years won't look as rosy ...

http://armstrongeconomics.com/archives/21626

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Interesting that the velocity had been increasing for years (since 1987) leading upto the 1997 general election and then peaked that year. NuLabour still won - massively (179 majority).

It was declining but still near the peak leading upto the 2001 general election. NuLabour incumbent won (167 majority).

It was in general decline but had been increasing for about 2 years leading upto the 2005 general election. NuLabour incumbent still won (66 majority).

It was still in general decline but had been increasing for less than a year leading upto the 2010 general election. NuLabour lost (Coalition 78 majority).

It's continued its steep decline ever since and not even a short blip upwards leading upto the 2015 general election. Conservative won (12 majority).

(majorities according to wikipedia)

http://armstrongeconomics.com/archives/29843

"..The banks have become traders ever since the repeal of Glass Steagall in 1999. The VELOCITY of money continues to collapse, for the big money center banks would rather trade with money for profit than lend into the economy on a relationship basis, which is what creates jobs – not trading...This is EXTREMELY dangerous and this is the CAUSE of the deflationary trend when taxes rise, disposable income declines, investment drops and no small business rises resulting in the lost generation of the the youth..."

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His 78 year Real Estate Business cycle shows 2015 as the last top out and then decline for 18 years til 2033. Means houses won't necessarily be a good store of value or investement.

His graph was first produced in 1979 - all seems to have panned out as he predicted when you compare it to HPC's chart.

Note this cycle is relevant only to the countries based in the West, as the East is on a different part of the cycle wave.

Wooah!

1998 top was clearly dead wrong.

2015 - 2033 is a prediction and hence isnt relevant. Rest of data was hindsight

If you want to see just how wrong these people usually are go read Bob Beckmans "Downwave". I keep an original copy on my bookself to remind me that the world is full of very plausible charlatans with very pretty charts.

http://www.amazon.co.uk/The-Downwave-Surviving-Second-Depression/dp/0903852381

1983.

When the depression didnt materialise in 1983 on he followed it up in 1988 with "Into the upwave" just before the recession hit.

http://www.amazon.co.uk/Into-Upwave-Prosper-Slump-Boom/dp/1852651105/ref=pd_sim_sbs_b_1?ie=UTF8&refRID=09HH0489902YF51JHKTA

Edited by R K

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Wooah!

1998 top was clearly dead wrong.

2015 - 2033 is a prediction and hence isnt relevant. Rest of data was hindsight

If you want to see just how wrong these people usually are go read Bob Beckmans "Downwave". I keep an original copy on my bookself to remind me that the world is full of very plausible charlatans with very pretty charts.

http://www.amazon.co.uk/The-Downwave-Surviving-Second-Depression/dp/0903852381

1983.

When the depression didnt materialise in 1983 on he followed it up in 1988 with "Into the upwave" just before the recession hit.

http://www.amazon.co.uk/Into-Upwave-Prosper-Slump-Boom/dp/1852651105/ref=pd_sim_sbs_b_1?ie=UTF8&refRID=09HH0489902YF51JHKTA

I presume you've read the book, how accurate is this comment/review?

Bob Beckman and his team by using government figures knew we were going into the biggest Recession back in the very early 80s. Though out on his timing he predicted banks going bust and mass unemployment. Most of all he states why we are going into the biggest recession the world has seen and why there's no way out. A book all politicians should read.

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The significance of the all-time low in the velocity chart is that supply is simultaneously at an all-time high. Money supply times money velocity (if calculated correspondingly) equals GDP. So, if economic activity in terms of the amount of trade stayed relatively stable, a reversion of the velocity to the mean (or beyond) will bring a price explosion a.k.a. (hyper-)inflation.

Expand on this please

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I presume you've read the book, how accurate is this comment/review?

I read it in 1983 but not since. I read Upwave in 88/9 or whenever it was published.

Bob Beckman and his team by using government figures knew we were going into the biggest Recession back in the very early 80s. Though out on his timing he predicted banks going bust and mass unemployment. Most of all he states why we are going into the biggest recession the world has seen and why there's no way out. A book all politicians should read.

We were coming out of the Thatcher induced recession by then and it was really all about the coming deflationary Great Depression II. Unfortunately for him the opposite happened. Which is why I find similar projections of a dystopian future by people like Armstrong amusing.

In a nutshell if people are predicting deflation well get inflation. If people are predicting ZIRP forever it wont happen (sorry Sceppy). If people are predicting DOW 50,000 itll crash. If people are predicting wage falls forever were about to see a long period of wage rises, if people are predicting $10,000 gold itll go to $500. If people are predicting $300 oil itll fall to $35 and so on. People are rubbish. If they have a "computer model since 1979" or have written a book with their prediction theyre double rubbish.

Edited by R K

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The significance of the all-time low in the velocity chart is that supply is simultaneously at an all-time high. Money supply times money velocity (if calculated correspondingly) equals GDP. So, if economic activity in terms of the amount of trade stayed relatively stable, a reversion of the velocity to the mean (or beyond) will bring a price explosion a.k.a. (hyper-)inflation.

Money supply hasnt increased. Reserves parked at the FED have increased. Not the same thing at all. CBs have trillions in bonds they can sell off to absorb any excess rise in the money supply if / when it happens.

If you think that = hyperinflation you havent been watching what happened for the last 6 years - although your silver assets ought to have given you some indication by now.

Edited by R K

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I read it in 1983 but not since. I read Upwave in 88/9 or whenever it was published.

We were coming out of the Thatcher induced recession by then and it was really all about the coming deflationary Great Depression II. Unfortunately for him the opposite happened. Which is why I find similar projections of a dystopian future by people like Armstrong amusing.

In a nutshell if people are predicting deflation well get inflation. If people are predicting ZIRP forever it wont happen (sorry Sceppy). If people are predicting DOW 50,000 itll crash. If people are predicting wage falls forever were about to see a long period of wage rises, if people are predicting $10,000 gold itll go to $500. If people are predicting $300 oil itll fall to $35 and so on. People are rubbish. If they have a "computer model since 1979" or have written a book with their prediction theyre double rubbish.

If I was so convinced of my economic analysis I wouldn't tell anyone else but load up a huge trading position based on my "insight".

Writing a book is a great hedge - you've paid for it whether he's right or not.

I should point out for the sake of balance that I've predicted 7 of the last 2 recessions.

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Fair-game, but quite a few of his forecasts have been spookily accurate: Equity bull market of the 80's (alluded to by Max Keiser in his radio prog posted by Fru-gal recently), 87 & 89 crashes.

The movie documentary currently doing the rounds about his life covers these forecasts (see attachment) that he published in 97 for his clients eyes only, just before he was arrested and spent a decade in jail. Made me sit up and take notice.

2015.75 is on our doorstep and the ultimate wait'nsee.

image.jpg

post-8743-0-99639800-1432077385_thumb.jpg

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Bob Beckman and his team by using government figures knew we were going into the biggest Recession back in the very early 80s. Though out on his timing he predicted banks going bust and mass unemployment. Most of all he states why we are going into the biggest recession the world has seen and why there's no way out. A book all politicians should read.

He became known as the man who predicted the house price crash (predicted regularly for quite a few years before it actually happened starting at the end of the 80s). An investment manager, investment pundit and regularly being interviewed on the radio etc about his predictions on the economy and on the imminent house price collapse.

He did persist with that prediction and was eventually proved to be right.

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I like Armstrong as he does seem to track capital flows better than most but you have to take his predictions with a pinch of salt. He calls a lot of PRICE and TIME predictions (as he puts it) and can back out of his calls by saying PRICE didn't meet TIME or vice versa. So I generally ignore any numbers he puts out, taking an interest only on whether he is bullish or bearish on a particular market or asset class. He is pretty good for trends imo as he tracks global capital moreso than most.

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The significance of the all-time low in the velocity chart is that supply is simultaneously at an all-time high. Money supply times money velocity (if calculated correspondingly) equals GDP. So, if economic activity in terms of the amount of trade stayed relatively stable, a reversion of the velocity to the mean (or beyond) will bring a price explosion a.k.a. (hyper-)inflation.

So velocity of money is interesting......greater supply of homes that are perceived to be of value means higher turnover of homes, more transactions or sales and purchases, greater velocity of money.....the knock on effect is greater velocity still with purchase of white goods, decoration, improvements etc.....economic policies have helped create low turnover of money and therefore deflation.....low demand a) from those who can't, B) from those who won't.

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